SEC Issues Policy Statement Clarifying that Mandatory Arbitration Provisions Will Not Affect Effectiveness of Registration Statements
The SEC issued a policy statement clarifying that mandatory arbitration provisions for investor claims will not impede the acceleration of a registration statement's effectiveness.
The Securities and Exchange Commission (SEC) announced that mandatory arbitration provisions are consistent with federal securities laws. Chairman Paul S. Atkins stated the policy provides clarity regarding the acceleration of registration statements. The Commission will now focus on the adequacy of disclosures rather than the existence of arbitration clauses.
The Securities and Exchange Commission (SEC) issued a policy statement to clarify that mandatory arbitration provisions for investor claims do not hinder the acceleration of a registration statement's effectiveness. Chairman Paul S. Atkins emphasized that this decision aligns with the Supreme Court’s current interpretation of the Federal Arbitration Act. The Commission determined that such provisions are not inconsistent with federal securities laws. Consequently, SEC staff will focus on the adequacy of registration statement disclosures, including those pertaining to arbitration, when deciding on acceleration. This policy resolves long-standing uncertainty for issuers seeking to expedite their registration processes. Ultimately, the move aims to provide regulatory clarity while maintaining the Commission's mission of transparency.
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- person chairman paul s. atkins
- person commission staff
- person paul s. atkins
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- agency Securities and Exchange Commission
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- Securities And Exchange Commission published policy statement
- Chairman Paul S. Atkins said the Commission's lack of a recent public position is unmoored from its mission and mandate
- Chairman Paul S. Atkins stated the Commission's role is to provide clarity that mandatory arbitration provisions are not inconsistent with the federal securities laws
- Issuers asked whether a mandatory arbitration provision would impact the acceleration of the effectiveness of their registration statement
- Commission Staff will focus on the adequacy of the registration statement's disclosures, including disclosure regarding the arbitration provision
The Securities and Exchange Commission today published a policy statement to announce that decisions about whether to accelerate the effectiveness of a registration statement will not be affected by the presence of a provision requiring arbitration of investor claims arising under the federal securities laws. “As an agency that trumpets the importance of disclosure and transparency, the Commission’s lack of a recent public position on this important topic is unmoored from both its mission and its mandate. That ends today,” said Chairman Paul S. Atkins. "While many people will express views on whether a company should adopt a mandatory arbitration provision, the Commission’s role in this debate is to provide clarity that such provisions are not inconsistent with the federal securities laws,” Chairman Atkins continued. “We have fulfilled that role through the issuance of this policy statement.” Issuers have periodically asked whether a mandatory arbitration provision for investor claims arising under the federal securities laws would impact the acceleration of the effectiveness of their registration statement. Today’s statement provides the Commission’s view that, based on the Supreme Court’s current interpretation and application of the Federal Arbitration Act, the existence of such a provision will not impact determinations whether to accelerate the effective date of a registration statement. As a result, when deciding on whether to accelerate effectiveness of a registration statement, the Commission staff will focus on the adequacy of the registration statement’s disclosures, including disclosure regarding the arbitration provision.
The Securities and Exchange Commission today published a policy statement to announce that decisions about whether to accelerate the effectiveness of a registration statement will not be affected by the presence of a provision requiring arbitration of investor claims arising under the federal securities laws. “As an agency that trumpets the importance of disclosure and transparency, the Commission’s lack of a recent public position on this important topic is unmoored from both its mission and its mandate. That ends today,” said Chairman Paul S. Atkins. "While many people will express views on whether a company should adopt a mandatory arbitration provision, the Commission’s role in this debate is to provide clarity that such provisions are not inconsistent with the federal securities laws,” Chairman Atkins continued. “We have fulfilled that role through the issuance of this policy statement.” Issuers have periodically asked whether a mandatory arbitration provision for investor claims arising under the federal securities laws would impact the acceleration of the effectiveness of their registration statement. Today’s statement provides the Commission’s view that, based on the Supreme Court’s current interpretation and application of the Federal Arbitration Act, the existence of such a provision will not impact determinations whether to accelerate the effective date of a registration statement. As a result, when deciding on whether to accelerate effectiveness of a registration statement, the Commission staff will focus on the adequacy of the registration statement’s disclosures, including disclosure regarding the arbitration provision.